Guaranty Bank in Milwaukee is under pressure to boost its capital.
The Office of Thrift Supervision imposed a cease-and-desist order last week requiring the struggling $1.6 billion-asset Guaranty to increase its core capital ratio to at least 8% and its total risk-based capital ratio to at least 12% by June 30.
At the end of 2008 the thrift had a core capital ratio of 5.40% and a total risk-based capital ratio of 10.24%.
Typically a thrift needs a 5% core capital ratio and a 10% total risk-based capital ratio to be considered well capitalized.
The OTS said a July 7 exam indicated that Guaranty had engaged in unsafe and unsound banking practices. The agency cited Guaranty's poor earnings and a high level of classified assets, among other things.
With its provision for loan losses spiking, the thrift lost $3.8 million in the fourth quarter, its tenth loss in as many quarters, according to data from the Federal Deposit Insurance Corp.
The noncurrent loan ratio rose to 3.11% as of Dec. 31, from 2.37% the year earlier, the FDIC data showed.
The OTS said Guaranty must revise its policy for calculating the loss allowance and reduce the level of adversely classified assets. It also must revise its business plan by April 30 to detail strategies for preserving and enhancing capital and improving earnings.
The order restricts Guaranty's asset growth, the amount of interest it pays on deposits and its use of brokered deposits.
A separate OTS order against the thrift's parent company, Guaranty Financial Corp., restricts paying dividends and incurring debt.